Mr. Speaker, I thank you for the opportunity to address the House tonight on what is called the Defense Logistics Agency, something probably not many people have heard about. The DLA is like a big hardware store in the Department of…
Mr. Speaker, I thank you for the opportunity to address the House tonight on what is called the Defense Logistics Agency, something probably not many people have heard about. The DLA is like a big hardware store in the Department of Defense.
About 30 years ago, we heard horrific stories about wasteful spending of taxpayers' dollars being spent: $436 on a hammer, $7,600 on coffee makers, and $640 for toilet seats. We all thought, Well, it has been taken care of. Well, not so fast.
I am showing you right now what is a plumbing elbow. At the local hardware store, this elbow sells for $1.41. But the taxpayers of this country spent $80 to a defense contractor that charged us that much money for this elbow.
How about a box of washers? At the local hardware store, we as individuals would pay something like $1.22 for this box of washers. What did the taxpayers of this country pay a defense contractor for a box of washers? How about $196.50?
So that issue that was around some 30 years ago is still with us today. It is time for the House of Representatives and for the Armed Services Committee to hold a hearing on why it is that the Defense Logistics Agency, our hardware store that is responsible for putting together good pricing on spare parts, is being overturned and overlooked by defense contractors and persons within the Department of Defense who would rather go outside and pay triple, quadruple, 100 percent more, or 200 percent more.
We are going to play a game tonight on C-SPAN called ``The Price Is Wrong,'' and see what we are talking about here. And if for 1 minute you think that we are talking about small potatoes, we are not talking about small potatoes. We are talking about a lot of money.
The Defense Department has so many excess spare parts, they have disposed of--thrown away--$15 billion in excess parts and materials in just the last 3 years. There is about $96 billion worth of spare parts inventory right now in the Defense hardware agency coffers.
So why would we ever go outside the internal hardware store to buy parts?
Well, some argue that it is faster or it is cheaper to go outside. Audits have revealed instances when the military had enough of certain parts that they would last 100 years--and they are still going outside of the Defense Logistics Agency. That is the equivalent of having spare parts that include horseshoes for a cavalry. If we were looking back in time today, that is 100 years of spare parts. The likelihood of these parts being used completely over 100 years is not so likely.
You might say, Well, maybe it is difficult for the Defense Department to figure out where their spare parts are and how much they are and how much they cost. Well, that is not correct. In fact, the Department of Defense has the resources and the databases to check the accuracy of these prices. The auditor found these overcharges by using the Department of Defense's own database. So this is no more than a click on a mouse to find out, one, whether the part is in stock and, two, how much it costs.
Well, let's start this game. The first game we are going to play is called ``Flip Flop.'' It is a game where the numbers are scrambled.
I am going to start with the gate assembly in this picture here. This is what it looks like. It is a little bit larger than a quarter. Ramp gate roller assembly. It is used for the Chinook helicopters.
You can buy this at a local hardware store for about $3.50, but because this is the military and we want the very best quality, the DLA sells this part for $7.71.
So the question is, What did the Army pay for this gate assembly? Did they pay $7.71 cents? No, they didn't pay that.
Did they pay $77.01?
No, they didn't pay that either.
Did they pay $771 for this little gate assembly part?
No.
For this ramp gate roller assembly they paid $1,678.61.
That is obscene, and that shouldn't be happening in the Department of Defense or anywhere in the Federal Government. The taxpayers should not be ripped off in that manner.
In ``The Price Is Wrong,'' taxpayers always lose because the Defense Department consistently pays too much, yet defense contractors consistently win.
So we are going to play the next game, which is ``That's Too Much.'' See what happens again when the military thinks that they can get something faster and cheaper by not going to the Defense Logistics Agency, our in-house hardware store.
This is a bearing sleeve. Let's see what we paid for this. Did we pay $6? That is what it would cost at our local defense hardware store. No, we didn't pay $6.
Was $86 too much to spend for that bearing sleeve?
No, $86 wasn't too much.
How about $286? Was that too much to pay?
No, that wasn't too much to pay either.
We paid $2,286 for a bearing sleeve that cost $6 at the Defense Department's Defense Logistics Agency.
So that is what we are dealing with here--a rip-off of the taxpayers.
The truth of the matter is that the Defense Department didn't just buy one of these bearing sleeves that we just bought one of here this evening. They bought 573 of these bearing sleeves--not for $6, not for $86, but for $2,286. And let me do the math for you. That is $1.3 million in overpayments for just these 573 bearing sleeves.
Next, we are going to talk about a spur gear for the Chinook helicopter. This is what it looks like. It is this tiny little thing smaller than a quarter. This is what is used in Chinook helicopters. We have lots of them in the DLA. But, again, they didn't want to go to the DLA, our hardware store, to actually purchase this.
They would have paid $12.51 if they had gone to the hardware store within the Department. No, they didn't want to do that.
So was $125 too much to pay for that spur gear?
No, that wasn't too much.
In fact, they were willing to pay $644.75 for this little rubberized spur gear. It was 34 times the fair and reasonable price.
So, again, why are we doing something like this? Why are we allowing the taxpayer dollars to be flushed down the toilet by not paying what is the normal price for these spare parts?
The last part is a flush door ring. Look at this. This is a pen next to it so
you can see this is a pretty small part. It is smaller than a pen the contracting officer would have used to sign off on the price. The DLA sells this part for $8.37.
Did we pay $83.37 for this product?
No, we didn't pay $83.37. That wasn't too much.
What we did pay, though, was $284.46 for this flush ring--34 times the fair and reasonable price. For that price you could go to dinner, a movie, and rent a hotel room.
Which brings me, I guess, to our last game, ``The Showcase Showdown'' on ``The Price Is Wrong.'' Much like ``The Price Is Right,'' we have this final showcase and we are going to compare two packages and guess which one costs more.
The first showcase is two ramp gate roller assemblies. This was the very first thing that we showed you earlier. Here it is. This is the item that cost $7.71.
So the question is, which costs more as a package, two ramp gate roller assemblies or a trip to Paris, France? It includes airfare and 4 nights in a four-star hotel for two adults. Which one do we think costs more?
Well, you have probably figured out that we in fact paid more for the ramp gate roller assembly, times two, than you would have paid for a trip to Paris France. The Army paid $3,357.22 for these two parts, while the trip to Paris is only $2,681.
So what are we doing here? How many more studies have to be done for us to make a serious attempt to clean up the spare parts issue in the Department of Defense?
Very recently--in fact, it just came out in February of this year-- the inspector general for the Department of Defense put out this report entitled, ``Air Force Lifecycle Management Center Could Not Identify Actual Costs of F-119 Engine Spare Parts Purchased From Pratt and Whitney.''
Can it get any more embarrassing than that? Not only are we spending extraordinary sums of money on spare parts and not using the internal hardware agency that we have, but in an inspector general's report, the Air Force can't even figure out how much it paid for the initial spare parts.
So I would close, Mr. Speaker, by saying that we have a lot to do. The Army overpaid Boeing $13 million recently, but the Pentagon only recovered $2.6 million.
It included paying twice the fair and reasonable price for kits, overpaid $16,000 for a structural support that should have only cost about $1,300.
So, all right, we overpaid; they overcharged. What happened next? Well, after the IG exposed the rip-off that had occurred, what did we do? Was that defense contractor kicked out?
No, I am sorry to say that what happened was the Air Force gave this contractor a new contract to oversee the supply chain contract. That is like giving the fox a contract to guard the chicken house.
I don't like playing this game any more than I think the taxpayers do; and it is not a game, it is truly a disaster, and it is one that we, as Members of the House of Representatives, have to clean up.
So I will continue to make the public aware of these kinds of overpayments until we fix the system. Stay tuned for the next show, ``The Price Is Wrong.''
Mr. Speaker, I yield back the balance of my time.